Abstract
This article is tested for the hypothesis regarding the causality relationships between a macroeconomic gap, especially the investment–domestic savings’ gap, and the inflation rate. For empirical purposes, Dumitrescu and Hurlin (Econ Modell 29:1450–1460, 2012) method for Granger causality in panel data was applied to the annual series from 1995 to 2014, covering a group of 50 emerging and developing countries. The empirical findings indicated a corroboration of the tested hypothesis, according to which an increase in the macroeconomic gap is accompanied by a rise in inflation rates.
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Notes
- 1.
Although all the estimated coefficients have small values, it is important to regard them as a preliminary step. Indeed, our main goal in the present work was to assess causality relations between the studied variables. More robust measures of correlation require multiple regression analysis in panel data, thereby taking into account control variables affecting the behavior of the dependent time series across countries.
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Moreira, R.R. (2020). Inflation as Reflecting Macroeconomic Gaps: An Analysis for Emerging Economies. In: Tsounis, N., Vlachvei, A. (eds) Advances in Cross-Section Data Methods in Applied Economic Research. ICOAE 2019. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-030-38253-7_30
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